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The Ironman World Championships are always a great time in Kona, Hawaii. The athletes, their families and the companies add a vibrancy and level of passion to Kona that make it one of the most exciting places in the world. It’s a great time.
Kona Impact has been providing displays, banners, posters and printing services for many of the companies that come here for years. We certainly appreciate the work, and we enjoy working with companies from all over the world as they set up and operate their booths and retail locations.
This year we would like to give something extra to the companies that get their printing and sign jobs to us early. This will allow us to plan our resources better and will ensure that the all the print and signs are done when they arrive.
We like to say that getting your jobs in early means you will have one less thing to worry about! We take a photo of all completed projects and send them to the client, so that then can rest assured everything is done to a high standard of quality.
So, for all orders over $250 placed for Ironman before 16 September, we will give you some custom bling from Kona Impact and a gift certificate for a lunch at one of our favorite Kona restaurants: Lava Java or Huggo’s. Both are on Alii Drive and close to all the Ironman action.
If you place your order between 17 and 23 September, we’ll give you a gift certificate for a few cups of coffee or a smoothie.
We welcome orders for Ironman event printing, signs, banner, poster and vehicle graphics at any time time. We even have been known to deliver products on the night before, the day of and the day after Ironman. If you have a last-minute need, give us a call; we can probably help.
74-5599 Luhia St, E-7
Kona Impact will soon celebrate its tenth year of business in Kailua-Kona. I remember very well the early days when the phone did not seem to ring very much, and we were not as focused as we are now. It took some time, but it was great to beat the odds: 50% of businesses don’t make five years, and according to this article, 96% don’t make it ten years.
So, we’ve obviously learned a thing or two over the years.
Here are five decisions we made that, I feel, were critical to our success:
- We kept expenses low at the beginning. A lot of new businesses look for prime office or retail space and spend a lot of money on newspaper advertising. We didn’t. Our first office space is now affectionately called “the dungeon” as it was a small, windowless space in a fairly run-down building. We spent almost nothing on print advertising and nothing on radio or television. This allowed us to have the resources to weather the inevitable financial storms we faced.
- We have done spectacularly well online. Even ten years ago, we knew that the best, most cost-effective place to be found was online. Over half of our initial clients came to us after finding us through online searches, and to this day, a large percentage of our new clients come to us through search (with the other biggest percentage coming through referrals).
- We knew when to throw in the towel. We had five pillars of our business when we started, and within a year, it was evident that two of these pillars were not working out. The demand was just not there, and, truth be told, there were other businesses in town more established and better at these things than us. We quickly stopped offering these services, cut our losses, and focused on what we were really good at. Failure was a great teacher!
- We identified inefficiencies in the market. After trying many times to buy local and support our local businesses, we gave up trying to send clients to some providers in town. Their customer service, products, and quality were horrible, so we saw an opportunity. Growing into the general printing, wide-format printing and signage businesses made a lot of sense, since we were already doing the design work. They were mostly unimaginable when we started; now they are a big part of our product mix.
- We have been active in the community. Kona is a small town, one that relies a lot of word-of-mouth marketing. For me, one of the best business (and personal) moves I made was joining the Rotary Club of Kona. Each week we have lunch and an outside speaker gives a presentation. The presenters are mostly community leaders, and their presentations are great ways to know what is happening in Kona and the issues facing our community. Another part of Rotary is the awesome community service projects we do like vision testing for our Keiki, building parks, planting trees, and fundraising. The connections in Rotary have not only provided me some business but also helped me meet some simply wonderful human beings. I highly recommend any entrepreneur at any stage of his or her business to focus on face-to-face connections in a service organization, a church, a sports team or any group of like-minded people.
Like any business, there are hundreds of decisions that we have made that have got us where we are. Some, have been disastrous, and others have been helped Kona Impact prosper.
Hawaii is a paradise for visitors, so much so, that many who come here on a vacation decide to stay. The allure of the ocean, the tropical landscape, and the great year-round weather, make the Hawaiian Islands a great place to live.
Doing business here, however, is another story. It’s not to say that running a business in Hawaii is any more difficult than running one the Mainland; it’s not if you understand and accept some of the unique challenges. In fact, many of the things that are challenges, can also, if understood correctly, result in huge opportunities.
Here are ten thoughts on running a business in Hawaii
1. The big box stores rule most retail.
Don’t even bother trying to compete with the big box stores. In Kona, Hawaii, where I live, we have Lowe’s, Home Depot, K-Mart, Walmart, Target, Office Max and Petco. If you want to open a retail business, don’t even think of trying to compete with the big boxes; they will win on price, selection, and convenience. Find a unique concept, something that you can do at good margins if you want to go into retail.
2. Franchises don’t do make sense (for the most part)
High shipping costs and a relatively small population (except in the Honolulu metro area), make it difficult for a lot of small and medium-size franchise businesses to do well. There are no economies of scale for a one-off chain restaurant, and the dispersed population on the islands makes it hard to open many units. So, if you can deliver franchise quality systems for auto repair, cleaning, accounting, jewelry, home services, and others, you will be able to do well and avoid the onerous franchise fees and costs.
3. The three-legged chair economy: tourism, real estate, and construction
The Hawaiian Islands’ economy is mainly based on tourism, real estate, and construction. Some add military spending for Oahu. Our agriculture, technology, education, research, manufacturing and medical sectors contribute relatively little, on a percentage basis, to our overall economy. Many newcomers will gravitate to these pillars; for example, there are many more realtors than there are properties for sale. Most construction workers can get a job right off the plane.
4. It’ll cost ‘ya
Almost everything in Hawaii will be 40%-100% more than the Mainland. Ninety percent of our food is imported, as is 100% of our building materials, vehicles, petroleum-based fuel and manufactured goods. Milk is $5-$6/gallon, gas is 40% more than most places in the Mainland, and a “starter” home will be $500,000 and up in most places. Our electricity costs are the highest in the country. One of the problems new business owners have in Hawaii is that they don’t have a good grasp of expenses, and they make poor decisions based on a lack of understanding of local costs.
5. Self-sufficiency is essential
One of our pieces of equipment needs to have a part replaced every year. The part is close to $1000, but to have the tech from Honolulu fly over to replace it would add $2,500 to the cost. We quickly learned how to do the work ourselves, and have saved $15,000 over the years.
For many repairs, there might not even be a service person available on the island. For others, the parts might be days, weeks or months away. Shipping costs will make some products prohibitively expensive. Skills like basic carpentry, mechanics, welding and “duct tape ingenuity” are very valuable on the islands, and can make the difference between staying in business and shutting the doors.
A well-planned house lot can provide huge amounts of fruit and vegetables a year due to excellent year-round growing.
6. What makes it bad, makes it good
You can look at all the challenges of doing business as obstacles or opportunities. For example, the lack of fast casual chain restaurants, make for great opportunities for restauranteurs to open restaurants without the costs and constraints of franchising.
Several local food manufacturers have had great success developing products for local consumption. We all have to eat. Even though their supply and manufacturing costs are high, they can offer specialty products at a decent price point compared to imported food.
There is seldom enough business for more than three prosperous companies in many sectors of the economy on the neighbor islands (excluding Oahu). Become one of those three, and you’ll have some great barriers to entry protecting your livelihood.
7. The best location on the island: online
The great equalizer to global commerce is the internet. I know of many local entrepreneurs who run their business from home in Hawaii. Many savvy business owners can leap frog their local competition by establishing a solid online presence and becoming much more visible online than their local competitors.
8. For every season, churn, churn churn
There is a huge amount of what I call “churn” in the Hawaii economy. Thousands of people move here to retire every year, and thousands die and move back to the Mainland every year. We see a huge amount of people who come to Hawaii in seek of paradise or a fresh start and soon become homesick or discouraged and leave. There is no land more geographically isolated in the world than the Hawaiian Islands, so, as one would expect, a lot of people come and leave.
This can be an opportunity. I know of one Realtor who has sold the same condo five times in ten years, each time earning nice commissions. Property managers here can charge a premium, and local contractors, it is well known, make more money for the same work when dealing with temporary or off-island residents.
9. You’re not in Kansas anymore; get over it!
This should be self-evident. Hawaii is not Kansas, nor is it California, Canada or Kentucky. There are tremendous opportunities for entrepreneurs here, but there are also huge obstacles, many of which might not seem apparent to a Mainlander. If you are hell-bent on living like you did before you came here, you’re going to pay a price, both monetarily and mentally. For example, if you need a softball league, there is one, but a much better choice might be joining one of the popular paddling teams. Apples can be expensive, but papayas are very inexpensive. It will be very expensive to repair a Volvo here, but if a Toyota works for you, you’ll be fine.
10. The quality of life in Hawaii can be exceptional and that matters…a lot!
My home is ten minutes away from one of the best beaches in America, and my garden grows year-round, supplying me with hundreds of pounds of fresh vegetables and fruit every year. I own one long-sleeve shirt, and I wear sandals all weekend, year-round. That level of quality of life is, in my mind, what I “buy” with my hard work and perseverance with my business. It’s not easy; it never is.
We all know that Hawaii is ranked high in taxes, regulations and the cost of doing business. We also know it is ranked low in education, workforce development and pro-business initiatives. These are realities, and they are not going to change anytime soon.
Anyone seeking to start a business in Hawaii needs to go in with his or her eyes wide open. Accept what is, and find opportunities where they exist.
Kona Impact | 329-6077
I found myself on the phone yesterday talking to the customer service people at one of my largest suppliers. We spend about $15,000 a year with them and what we buy is, by my estimation, very high-margin goods.
The problem was that they sold me several items on their website that I needed asap. I paid more for shipping—several hundred dollars—than I did for the products. I was fine with that, as I needed everything the next day. It turns out that they did not have the inventory they represented on their website, and the first order was not shipped. Ok, stuff happens, and I had a day of leeway, so I ordered a comparable product, paid for overnight shipping (again) and thought my problem was solved. Alas, they again sold something they didn’t have, and I was without the supplies I needed for one of my high-value clients.
The order snafus were serious, but the worst part was the complete lack of communication from the company. Not a call. Not an email. Nothing.
A simple call after the first order saying they were out of stock and could ship a comparable product (there are many that would have worked) would have taken care of my needs. Simple. Positive.
A call to them a day later was an exercise in frustration. The first person to answer the phone had no information, and to be honest, had no power or proper training to deal with anything. Her supervisor, perhaps jaded by life or the job, was worse; very defensive and full of excuses.
Here’s what we all should be doing when our businesses let a customer down.
- Listen to the customer and let her get all of her thoughts out.
- Ask questions, paraphrase and make sure you understand the issues.
- Show understanding of the customer’s feelings. If this does not come naturally, make a list of appropriate phrases and keep them visible in your work area.
- Apologize for the mistake!
- Only give excuses for things that are temporary. By this I mean, if you couldn’t ship because FedEx had delays due to weather or your machinery broke and is being fixed. Most people can understand temporary or unforeseen issues.
- Do not give excuses related to poor management, poor inventory control or lack of staffing. Your client doesn’t want to hear about your problems: he called to solve his. The best thing you can do is work internally to fix your systems to avoid future letdowns. Nobody wants to see your company’s dirty laundry.
- If you can’t solve the problem—often true with new and low-level employees—have the sense to get the caller to someone who can. There is nothing more frustrating—from the customer’s perspective—than being given the runaround and being condemned to voice mail hell. That only breeds additional frustration and lack of confidence in the business.
- It should be obvious, but, SOLVE THE PROBLEM! Sometimes the solution is to just listening to someone who wants to vent. It might mean repairing or replacing equipment or giving some additional technical support.
- Give something a little extra. A one-time discount, an extended warranty, some additional product at no additional cost. Make the customer feels as if you appreciate her, and you want her business in the future.
- Ask the customer if you have solved his problem! You might be surprised how the perceptions of the customer service rep and the customer differ.
The important thing to remember is that a customer who takes the time to call, email or a write a letter has probably not been lost. With a little listening, understanding and problem solving, you can probably keep customers who take the time to let you know of problems.
The unhappy customers who don’t reach out are the ones you have probably lost. They are also the most dangerous to your business, as they are likely to tell many others of their negative experiences.
Kona Impact | 329-6077
I get pitched every day for services and products, as I am sure is the case with everyone. I get tens of them in an email, and, unfortunately, many come on the phone.
One caller from this morning was particularly ineffective. After two or three minutes on the phone, I had no idea what he was talking about. I could not, in a sentence or two, say why he called, what he was pitching, and, obviously, if it was something in which I had any interest. Perhaps it was his first sales call, which would explain a lot. I blame his company, however, for not properly training the guy on doing phone sales. Don’t send salespeople into battle without equipping them to represent your products and company well.
I received another communication this morning for a business group that caught my attention. The writer used words like “stoked,” and “haha!” (among others). It was sent to business owners, which, for the most part, are way past their teenage years. I couldn’t help but think he totally misread who was going to be reading the information. It might be the right message for the surfer crowd, but it completely missed the mark for business owners.
It’s ok to be creative with marketing messages; after all, we all do enjoy creative and innovative ways to market and to sell. The point is that you need to consider who will be reading what you write.
One master of knowing his audience is Billy Kenoi, mayor of Hawaii Island. I have seen him on numerous times working a room, going from Hawaiian pidgin to more Standard English in a heartbeat. It reminds me of seeing bilingual kids switching languages in a flash. Mayor Kenoi, to his credit, knows how to connect.
If you are communicating with business professionals, learn the language of business. If you are marketing to surfer teens, spend some time hanging out at surf spots talking story. This is by no means “selling out;” instead it is making rational and contextual choices to achieve success.
I have never heard a business owner say someone was too professional; I hear all the time from fellow business owners that someone “talked like a 16-year-old” or “couldn’t communicate clearly.” When in doubt, error on the side of caution.
A few days ago, I wrote about natural disasters and how they could destroy a good business overnight. I wrote this not to scare or discourage; my goal was to promote preparedness.
I saw today two possible game-changers that come from a different source: government actions. I make not claims about whether these make sense or are good policy; I just want to highlight another set of threats to business viability.
Banning Dolphin “Swims”
The National Marine Fisheries Service of the National Oceanic and Atmospheric Administration announced a proposed rule change that would ban “dolphin swims” within 50 yards of our coastal spinner dolphin populations. Good or bad, this means that many businesses built on the idea of dolphin swims/encounters will no longer be able to take tourists and drop them in close proximity to dolphin pods. There are many boats that advertise dolphin swims, and it’s common to see four or five boats with 30-40 swimmers around and in spinner dolphin pods.
These businesses will have to change, and I would guess many of these will see reduced revenue because a “snorkel trip” sounds way less appealing to many than a “dolphin swim.”
Expansion of Marine National Monument, Papahanaumokuakea
About a decade ago, President Bush created a federally-protected area in the northwest part of the Hawaii. It was a huge area that was off-limits to commercial activity, including commercial fishing. President Obama has now quadrupled the area to almost 600,000 sq miles. Again, good or bad, this will affect the livelihood of many commercial fishing operations, and force them to compete in international waters for fish. Prices for fresh fish in Hawaii are likely to rise.
These game changers, many would argue, were predictable. Anyone watching a handful of boats descend upon a pod of dolphins could probably imagine that this behavior was going to be looked at by environmental agencies and possibly be considered detrimental to the dolphins’ health.
What are some other areas where we might expect rule changes that will put some businesses out of business?
The manta night dives have always been a point of contention by locals, environmentalists and tour operators. It used to be two or three boats with 10-20 people in the water; now, on some nights you’ll see perhaps 75 people in the water. There have been rumblings of new rules lately.
Mauna Kea access and tours. There is a lot of discussion about Mauna Kea access and use. Expect that there might be some drastic changes for those who run tours on the mountain.
Beach activities. The surf schools at Kahaluu Beach, the beach wedding providers and the kayak rental businesses up and down the coast might see their ability to do business affected by state of federal regulations.
Fish collecting. Some of the Kona coast is off-limits to fish collectors, those who catch, bag and sell ocean fish to the aquarium trade viagra 20mg. With a stroke of a pen, the practice could be banned, regulated or highly taxed. This is a highly-contentious issue for many, and it would only take a few people in the right places to stop this activity.
The one thing all of the business activities mentioned in this post have in common is that they rely on public land and oceanic resources to operate. I see that the businesses that tend to create the perception of environment overuse or affecting cultural resources tend to face significant risks of regulation. If I were in a business dependent on land, ocean or cultural resources, I would consider ways to cooperate and lessen perceived impact to avoid Washington, D.C or Honolulu-center regulations.
Killing the goose that lays the golden egg, has a predictable outcome.
Many small and medium-sized businesses find that they need high-quality design work, and they are considering in-house and outsourced solutions. There is no easy way to decide, but, at the very least, one should look at available resources, talent, and costs.
The simple answer is “yes” if the following conditions are true:
- The designer provides more value to the business that his or her cost. For example, if the salary is $40,000 and taxes and benefits cost another $17,500 (a likely scenario), then does he provide more than $57,500 benefit to the business? Since design work is by nature a creative endeavor, it is often hard to calculate a value, but start with the cost and weigh that against value.
- The designer is not learning on the job. If you have a small company and you’re paying a designer to fiddle-faddle around to achieve professional results, you’re probably wasting a huge amount of money, and your opportunity costs are high. If your designer has significant training and experience, you might be getting a good value for your money.
- There is a justifiable amount of work to be done. Any business owner knows that work tends to be completed in the amount of time allocated for it. This is especially true if the time is greater than the amount of required work. That is, if you give a person a day to set up a letterhead in Word, it’ll take a day, though an experienced person might only take an hour.
- You need things done immediately or in a very short time frame. A talented, in-house designer works for you, can juggle projects based on your priority. With a hired designer, your project is likely to be put in the designer’s queue of work to be done and may take longer.
- Your designer is creative and capable of growing and adapting different styles. Stale, ten-year-old design ideas, will not propel your business forward. A creative, dynamic design will grow add value to the business throughout her career.
You probably shouldn’t go with an in-house designer if the following conditions are true:
- You want to avoid on-the-job training. When you hire a professional designer, the designer is likely to deliver a quality result at a pre-arranged price. There is very little risk to the buyer. When done in-house, the business assumes the quality, time and opportunity cost risks. These can be huge and uncertain.
- Your staff is unqualified to do quality design work. We see this a lot; the business owner pays an employee with minimal qualifications and experience do design work. The result is sub-optimal, and the overall costs (salary+taxes+benefits+opportunity costs) are very high.
- Your business future is uncertain. Hiring and firing employees is one of the most stressful parts of running a business. Both processes have inherent risks to the business and other employees.
- You have access to professional design talent in your area. The total costs of hiring a professional designer are often much less, overall than the costs of doing things in house. If you can be assured of high-quality results, the decision to outsource is less complicated.
At Kona Impact, we believe that smart businesses do some things in-house, and they outsource when it makes sense. For example, we don’t fix our own A/C, our vehicles or some of our machines. We know there is someone better, fast and more professional in our community. We focus on what we do best: providing design, marketing, and sign solutions in Kona, Hawaii.